Shin Dong-bin's Personnel Changes on the 26th... 20% Executive Reduction and Bold Talent Selection

Breaking the Seniority-Based Position Assignment, Implementing Capability-Based Personnel Placement
Retiring Executives at 30% and Promoted Executives at 10% by Subsidiary

[Asia Economy Reporter Lim Hye-seon] Shin Dong-bin, Chairman of Lotte Group (photo), is initiating a personnel overhaul to lay the foundation for a "100-year Lotte." Lotte Group, which recorded its worst performance this year, will reduce the total number of executives by 20%. The company will break away from seniority-based appointments and thoroughly promote young talent based on ability.

Lotte Group announced on the 26th that it will carry out the 2021 regular executive personnel reshuffle. This year's personnel schedule has been moved up by about a month compared to previous years. Last year's regular executive reshuffle was on December 19. A business insider explained, "The group grew rapidly based on the businesses built by Honorary Chairman Shin Kyuk-ho, but the situation changed after COVID-19," adding, "Chairman Shin Dong-bin judged that growth is no longer possible by the old methods and is reorganizing the group to adapt to the new era."

First, the number of executives will be reduced by 5-30% depending on the performance of each affiliate. For Lotte Shopping and Lotte Chemical, the two main pillars of the group, the number of retiring executives accounts for about 30% of the total. The promotion rate will also be drastically reduced to around 10%. Significant changes are also expected in Lotte Food affiliates, which were the only ones in the food industry that failed to perform despite the "COVID-19 special" this year. Correspondingly, some Business Unit (BU) heads and affiliate CEOs are expected to be replaced.

To resolve personnel stagnation and inject tension into the organization, the executive rank system will also be reorganized. Executive ranks will be simplified, and the promotion period will be shortened by one year. The previous three-year term for vice presidents will be eliminated. A business insider said, "This means moving away from a conservative culture and strengthening capabilities through ability-based personnel decisions," adding, "It reflects Chairman Shin Dong-bin's determination to achieve generational change." In fact, it is known that there will be some bold appointments representing young talent in this reshuffle. Some minor changes are also expected in Lotte Holdings, whose role was significantly reduced in the August reshuffle.

In the August reshuffle, Hwang Kak-gyu, Vice Chairman of Lotte Group, stepped down as CEO of Lotte Holdings, and President Lee Dong-woo was appointed as the new CEO. CEOs of some affiliates such as Lotte Property & Development, Lotte Hi-Mart, and Lotte Rental were also replaced. A Lotte official said, "This year, the reduction was so severe that staying in an executive position was considered a promotion," adding, "This reshuffle is seen as an effort to completely change Lotte's DNA."

Meanwhile, CJ Group, Shinsegae, and BGF Retail will also conduct regular executive reshuffles from the 27th to the 30th. In the case of CJ Group, opinions are divided between "bold" and "stable" approaches, but since the group is continuing its emergency management stance, the prevailing view is that the reshuffle will focus on strengthening internal capabilities. Shinsegae is also expected to see little major change, as key affiliate CEOs such as those of Shinsegae Department Store and Shinsegae International were already replaced last year.